Reconstruction of Danish subsidiaries

Basically, a foreign parent company has four different models for improving the financial basis of a Danish subsidiary:

  1. Guarantee for the subsidiary’s debt
  2. Loan to the subsidiary
  3. Capital contribution without issue of shares
  4. Capital contribution against issue of shares.

When evaluating the different models, the tax effects in Denmark as well as in the jurisdiction of the parent company must be taken into consideration.

The tax effect for the Danish subsidiary of these different models is described below.

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